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Earlier in March, the finance ministry had requested different ministries and departments to not concern ‘Letter of Consolation’ to any employed entity for endeavor tasks on their behalf, as a part of efforts to enhance transparency in fiscal administration.
“In view of the foregoing and contemplating that the CPSE-NBFCs are necessary gamers within the infrastructure sector, it has been determined that CPSE NBFCs might concern LOCs,” an workplace memorandum issued by the finance ministry dated June 10 mentioned.
The memorandum posted on the the finance ministry web site on Monday laid down sure circumstances which embrace that lender must be a NBFC (Non-Banking Finance Firm) registered with RBI.
NBFCs must be concerned in infrastructure sector and LOCs must be supplied by banks just for opening letter of credit score for provide of products and companies by overseas suppliers, it mentioned.
Below no circustances the legal responsibility underneath this LOC ought to devolve on authorities of India, it added.
The memorandum was issued with the approval of the finance secretary and secretary expenditure.
